What is IP Geolocation & How Your Business Leverage it?

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If you’ve ever used a search engine to look for a nearby dry cleaner or restaurant to be served up a list of relevant options in your area, then you’ve most likely experienced IP geolocation at work. 

IP geolocation uses an internet-connected device’s IP address to determine the general vicinity of the device. This can be used by companies to serve up targeted ads and localized content as well as to manage digital rights, obtain enhanced analytics, target mobiles users, and prevent online fraud. 

While IP geolocation plays a large role in our everyday online lives, it is not necessarily the best-understood service. People are often curious how IP geolocation works, what it’s used for, and perhaps most importantly, how legal it is for companies to use. In this article, we’ll breakdown IP based geolocation, answer these commonly asked questions, and provide real-life examples of how it can provide value to businesses and customers alike. 

How Does IP Geolocation Work? 

As mentioned, IP geolocation uses an internet-connected device’s IP address to determine its general area. To understand how this works, you first need to know what an IP address is and how they are provided. 

IP Addresses

An IP, or internet protocol, address is a unique series of numbers attributed to every internet-connected device, such as a phone or computer. These devices have local IP addresses which are usually not accessible to the outside world. Instead, IP geolocation uses external IP addresses which are associated with the internet routers connected to the devices as opposed to the devices themselves. 

External IP addresses are provided by internet service providers (ISPs). When a user accesses a website from their device, information is exchanged between the site and the device, including the external IP address. 

ISPs typically use a range of IP addresses within a geographical area. Therefore, once the website has access to the user’s external IP address, it can determine the general area in which the user is located. However, it’s not as simple as merely obtaining a user’s external IP address and discovering where in the world they are. 

Geolocation Databases

As mentioned, ISPs typically use a specific range of IP addresses within a certain geographical area. However, this information isn’t readily available to just anyone, as ISPs do not divulge it to the public. Therefore, to determine a user’s general location using their external IP address, a site or business needs access to a geolocation database. 

Geolocation databases are services that gather as much information as possible about ISPs and the IP address ranges that they use. These databases have various methods for obtaining this information, some more effective than others. As such, some databases are more accurate than others when it comes to determining the location of a user. The most accurate geolocation databases can track a user’s location with an accuracy rate of 99% at a country level, 98% at a regional level, and 97% at a city level, all around the world. 

What Is IP Geolocation Used For?

When a company has access to a user’s IP address, they can gain valuable information about them. In addition to figuring out their general location, they can also determine their connection type and any proxies that might be in use, depending on the ability of the database. 

This information can be used for a myriad of beneficial purposes for both the company and the user. Companies can use this information to serve up targeted advertisements and content. After all, what good is an advertisement for someone who doesn’t have access to the business or service being advertised? Additionally, businesses can use IP geolocation to protect digital rights from piracy and prevent online fraud. 

From a consumer perspective, IP geolocation allows businesses to send relevant offers and services to where they are located. It can also help to prevent fraud. For example, if you tend to access a banking app from a certain location, and then a withdrawal is made in a different location that you’ve never been to, the app can stop the withdrawal from occurring, protecting your assets. As such, IP geolocation is beneficial to businesses and users alike. 

Is IP Geolocation Legal?

Although IP geolocation provides businesses with the approximate location of a user, it is not illegal. IP geolocation gathers no personal information about a user or any other information that would allow the business to determine exactly who the user is. Also, it is not 100% accurate. For this reason, businesses do not need to ask for the user’s permission before tracking them, which they must do for other forms of geolocation, such as device-based geolocation. 

About the Author

Josh Anton, with Digital Element, is a specialist in geolocation services

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